Targets and target achievements

Vattenfall’s assignment from its owner is to generate a market rate of return by operating an energy business in such a way that the company is among the leaders in developing sustainable energy solutions.

Strategic targets

Financial targets

Strategic targets

Vattenfall's strategy is built upon four strategic objectives. Vattenfall will be 1) Leading towards Sustainable Consumption and 2) Leading towards Sustainable Production. To achieve this, we must have 3) High Performing Operations and 4) Empowered and Engaged People. Vattenfall's board of directors adopted the six strategic long-term targets for 2020 in December 2015 to better reflect our strategy, and they took effect on 1 January 2016.

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Leading towards Sustainable Consumption Outcome 2016 Comment 
Customer engagement, Net Promoter Score relative1 (NPS relative): +2   +7 The Customers & Solutions operating segment continued its positive trend in NPS in 2016 with improvements in the end customer market in all four core markets: Sweden, Finland, Germany and the Netherlands

 

 

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Leading towards Sustainable Production Outcome 2016 Comment
Commissioned new renewables capacity 2016–2020: ≥2,300 MW 297 MW2 A total of 297 MW of new renewable capacity was installed in 2016. The new capacity consists of the Sandbank offshore wind farm in Germany (216 MW), the Högabjär (38 MW) and Höge Väg (38 MW) onshore wind farms in Sweden, and the 5 MW of solar energy adjacent to Vattenfall's Parc Cynog onshore wind farm in Wales.
Absolute CO2 emissions pro rata: 21 Mt 23.2 Mt3 CO2 emissions of 23.2 Mtonnes (23.4) in 2016 for continuing operations were slightly lower than in 2015. Including the lignite operations, CO2 emissions in 2016 amounted to 67.7 Mtonnes (83.8).

 

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High Performing Operations Outcome 2016 Comment
Return On Capital Employed (ROCE): 9% -8.5%4 The return on capital employed was -8.5% (-8.2%) for Total Vattenfall, i.e., including the lignite operations, and 0.5% (-1.8%) for continuing operations. Excluding impairment losses and other items affecting comparability, return on capital employed was 8.7% (7.4%) for Total Vattenfall and 8.7% (7.3%) for continuing operations.

 

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Empowered and Engaged People Outcome 2016 Comment
Lost Time Injury
Frequency5 (LTIF): 1.25
2.0 Lost Time Injury Frequency (LTIF) was lower than a year ago,at 2.0 (2.3).
Employee Engagement Index70% 57% The employee engagement index was 57% (59%) in 2016. The My Opinion survey for 2016 showed a lower engagement score.

 1) NPS is a tool for measuring customer loyalty and for gaining an understanding of customers' perceptions of Vattenfall's products and services.

The target is a positive NPS in absolute terms +2 compared to Vattenfall's peer competitors.

2) Pertains only to completed and commissioned wind farms as per 31 December 2016.

3) Pro rata values, corresponding to Vattenfall's share of ownership. The value has been adjusted compared to the value presented in Vattenfall's 2016 year-end report. Consolidated emissions amounted to 23.7 Mtonnes excluding lignite operations and 68.2 Mtonnes including lignite operations.

4) The key ratio is based on average capital employed. The lignite operations were classified as assets held for sale on the balance sheet as per 30 June 2016, which entails that the calculation of average capital employed excludes the lignite operations as from 30 June 2016.

5) Lost Time Injury Frequency (LTIF) is expressed in terms of the number of lost time work injuries (per 1 million hours worked), i.e., work-related accidents resulting in absence longer than one day, and accidents resulting in fatality. The ratio pertains only to Vattenfall employees.

6) Documentation for measurement of target achievement is derived from the results of the My Opinion employee survey, which is conducted on an annual basis.

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Financial targets

The financial targets relate to profitability, capital structure and the dividend policy, and were set by the owner in November 2012.

These targets are intended to ensure that Vattenfall creates value and generates a market rate of return that the capital structure is efficient, and that financial risk is kept at a reasonable level.

The targets are to be evaluated over a business cycle.

 

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Profitability Outcome 2016 Comments

Return on capital employed: 9%

-8.5%1 The outcome for Total Vattenfall was negatively affected by the recognition of impaired asset values. Excluding impairment losses and other items affecting comparability, return on capital employed was 8.7% for Total Vattenfall.

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Capital structure Outcome 2016 Comments

FFO/adjusted net debt: 22%-30%

22.6%2 FFO/adjusted net debt increased compared to 2015 (21.1%) for Total Vattenfall. Adjusted net debt decreased, mainly due to the lower net debt, at the same time as the FFO decreased slightly.

Net debt/equity ratio: 50%-90%

60.5%  The net debt/equity ratio is still within the target interval but increased slightly compared to 2015 (55.4%), mainly due to the negative result of the year.

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Dividend policy Outcome 2016 Comments

The dividend should amount to 40-60% of the year's profit after tax.

- Due to the negative profit for the year, the Board of Directors has proposed – in accordance with Vattenfall's dividend policy – that no dividend be paid for 2016.

1) The key ratio is based on average capital employed. The lignite operations were classified as assets held for sale on the balance sheet as per 30 June 2016, which entails that the calculation of average capital employed excludes the lignite operations as from 30 June 2016.

2) The lignite operations were classified as assets held for sale on the balance sheet as per 30 June 2016. As a result, the lignite operations are excluded from balance sheet items included in the calculations of key ratios as from 30 June 2016.

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Last updated: 2017-05-17 16:43